tv Squawk Alley CNBC January 17, 2017 11:00am-12:01pm EST
the s&p grinding their way higher on the s&p. treasury yields down, consumer staples are up, so it is a little bit of a reversal. that does it for us a on "squawk on the street." let's go to carl to kick off "squawk alley." >> good morning, 11:00 a.m. here on wall street and "squawk alley" is live. ♪ good tuesday morning, welcome to "squawk alley."
walter isaacson will be with us. first we're going to john harper. more companies are following in line, criticism from president-elect trump. our john harwood is in washington dc with more on that. >> in the age of trump, companies have learned very quickly if they want to get on the good side of a new president, they should tout those efforts and make them conspicuous and public. very substantial investments. now the companies say the investments were already planned. trump was on twitter today saying the jobs announcements are making the case that even before taking office, he is doing what he calls big stuff for the company.
he is hoping to build momentum. he could not avoid picking a moe money temperatu -- more money. house republicans want a border adjusted dax system for the business community that would tax imports but not tax exports. donald trump says it is too complicated. he has a punitive tax on companies that take jobs overseas, and we'll have to see what the wrestling match is for those who are very fond of the tax plan. and what sort of negotiations produce the result. he is going to assign republican priorities, but he made the case that he will try to alter some
of the priorities as well. >> thank you very much. we could go about a million different directions, but for now, let's try to zero in on the policy. >> what is particularly interesting is the job owning. i think the tariffs and buntive taxes is not a great idea. i think in some ways paul ryan nose the tax code, and i think it will win out. >> when do you think we'll know.
there is one thing companies may do, we're going to be looking at monthly totals to see which way the needle is moving. >> i was in detroit a week or so ago talking to bill ford we're sort of, you know, we want trump to be happy about it. in the end, in six months or a year, companies will be doing things for economic reasons. we're talking tens of thousands of jobs that will come back. it can't happy because people are opening one or two factories here and there.
it requires having a skilled work for in the long run, reduction and regulations. having a more coherent tax policy. or a boeing deal to create jobs. >> so whether or not there is demand to create that capacity in an economy running at full capacity -- >> we're running as you say full capacity, was it a 3 or 3.5% growth rate. on the other hand, we could have more robust growth. we also have people who are not in the job market. we could use a little bit more
of an increase in middle class wages. that is what the whole election was about. we need not just a few more jobs, but $35 an hour jobs where people can send their kids to college. then you're going to see the american economy robust again. >> walter, one of the things that i hear people talking about on main street is repeal and replace. whether or not it happens that way, whether or not they get to remain insured when they have pry existing conditions. how important is that for the way they get viewed? >>. >> this is the most important issue, you're going to have to have a health care system where people can leave their jobs and get another job. do things in which, if you have
a pre-existing season, you can't move up, you have to find a way to have the work force will more fluid, everyone be able to get health care coverage. i'm very encouraged that trump said very specifically, that we will have a plan that covers more people. if you don't do that you have a labor force that will stop, health insurance will be a mess, and people will be thrown off of health care, but they will still need health care. it will be deeply disruptive to the entire sector of the economy, and also the sector that depends on workers having good work. >> moving on to a difference topic. >> and one more thing, politically that will be the big
thing in this administration, they're just people across the country who need health care coverage. if they are thrown off, this will be a huge backlash. i think it is the biggest political land mine. >> i'm sure, i imagine the team is probably aware of that. business leaders meeting for the world economic forum, take a listen. >> the senate hearings, all it did is light what you have been saying from the beginning. the competitive environment does
not change. as a result, as long as the law is applied. >> he makes sense that spinning off cnn makes no sense when it comes to handicapping the deal. >> i just can't predict for you. it is very interesting. randall stevenens is right. you're going to have more even if it it is not purely based on the precedence that we have in law. you'll just say big media consolidation is bad. i can't predict what he will do
our who -- i don't think that there is a very clear legal case in terms of antitrust law. if you don't want more big media consolidation you're against this thing. >> it is at risk? as opposed to seeing this merger, it is not you're right you have to say could they leverage to change innovation or choice? those are all ar cane issues. the republican party always had two different groups.
the corporate business, and the populist republicans that resist, it is nothing new, but trump ran on the populous rhetoric of being -- as good as mine, but i think his populism and the populism of the people that elected him will cause with the big business reputation. >> certainly we're going to be leaning on you a lot, walter. even if you say your guess is as good as ours. walter, thank you. when we come back, what apple executive thinks about apple's push into original content, and
we are trying to create is a entire pop cultural experience. that includes audio and video. popular callture, smack on the nose. we're going to try. he mentioned "south park" as a hypothetical. apple seems to have lacked a coherent cohesive strategy around video, tv, and movies. they're rumored to do something here, something there. do you talk to jimmy? apple says he's not the music guy? who is on first? >> yeah, lots of reports swirling around. as for communities, you saw morgan stanley trim their numbers, the same analyst that made a top pick for the year last week. but the notion that when you're going into the end of a seven cycle, people start pulling back on their purchases. >> lots of people with stars in
their eyes around the ex-ipho - next iphone. people are excited about the next iphone, deciding the iphone 8 -- >> time will tell in this case for sure, meanwhile more than 30,000 are attending the national retail federation's big show this week to discuss industry challenges, courtney reagan is live there. good morning, court. >> good morning, carl, the expo center here is bursting with technology as you can see, but over the course of the weekend, the conversation has been worry about two things. getting consumers to spend on more traditional retail categories, and what, if anything, comes out of the border tax adjustments. president-elect donald trump telling the wall street journey he believes it is too
complicated. and william dudley saying he thinks the border tax adjustment could do more harm than good. >> i personally think the border tax adjustment proposal in the house is a pretty dramatic change and it could lead to a lot of changes in the value of the dollar, the price of imported goods in the u.s. i'm not sure it could happen very smoothly. >> and some of those consequences could be that the stronger dollar could hurt tourism as well as making investing less attractive, the goal is really to focus on technology companies, giving retailers a look at their technology that could help propel them into the future. we have seen things like 3d
prints of a cashmere sweater in less than 30 minutes. also jda software powers. amazon is a major disrupter, but they don't put up a booth here. they do send several dozen attendees. and when they were mentioned at the forum, they got nervous laughter. >>. >> still to come, teresa may breaking her silence on brexit. the market fallout, next. and later why snap chat is taking a page out of mark zuckerberg's play book. "squawk alley" will be right back. all my wool sweaters, smart tv and gaming system.
a big day in the u.k. of course, watching the pound for sure, let's go to seima in new york. >> yeah, european markets are a mix today, but the surging pound, they posted their biggest one day game since the financial crisis after the prime minister outlined her plans. she says the government would put a final deal to a vote, but that the u.s. will not seek nept. here here is what she had to say in her speech. >> we seek a new and equal zip. not partial membership of the european union. >> the united kingdom is leaving
the european union. >> a rather conciliatory town. . one of the factors driving the hound higher, they made a second independent referendum, but they can't scotland out. >> prettyish american tobacco agreeing to take control. and in the meantime, the home of ray ban agreeing to merge with a french optics maker. i just got off of the phone with an analyst, and they say despite, and that in itself is
reassuring. also on the upcoming presidential inauguration. and well far goes gloeshl research analyst, good morning, good to see you both. you have a lot of worry and questions about whether or not this strong collar trade survives given the news flow, are you feeling any different today than you have been? >> the market since december 14th, after this giant rerating, has been basicallyize ways. it is where it was about four weeks ago. all through real rates, very bullish for risk assets, and the dollar is sitting around doing nothing as well. i think it makes sense because the markets priced in something more growthy and inflationary
because they don't know how much because they don't know what will happen in congress and what kind of deregulation we'll get, so the market is on hold pending more regulation. if the dollar stops going up, that will spark a fire in emerging markets and other nonu.s. markets including europe. . so nonu.s. markets have really lagged and if they just stop going up i think the markets will catch up. >> they say pending more information, what does that mean when the trickle of information will be frustratingly slow. >> we think that the rally in the markets have come forward from the rallies that we it anticipated in the other
markets. and we think that the current selloff that that we are seeing today is giving some of the front running that we saw post election. >> i'm wondering, how does the talk of a border adjustment tax on tariffs on jer man cars ask your outlook on some of these large companies, the european companies, and how they're likely to fair? >> this is part of the uncertainty. we have to wonder if a 20 multiple on trailing earnings is the right multiple concerning the policy uncertainty that we're likely to face. one could make an argument that the ratio should probably come down. so i think that will be one of the important tradeoffs, but the answer is that we don't know and the question is will investors want to be compensated for that
increased uncertainty, i think that is pretty unlikely. q 4 earnings are just starting to get reported now. if we get a typical seasonal drift, we could be at plus seven. so we have strong economic momentum, we have ---survey out today asked what the biggest risk is right now. what do you think it is? >> i think it is ols uncertainty. we have seen a lot of speculation from what the incoming president would bring. but we don't have a lot of clarity around the specifics. i think that is in and of itself
for global. i think that is one of the bilgest tail risks that we're looking at? >> i think it is the valuation. there is two, one that the fed leans too aggressively by overtightening and then the ten year goes north of three. and the dollar could go go up too much. that is one risk, but i think the fed is in a pretty good position not to overreact to anything as they already stated. the other one is just what i said before, valuations are probably too high considering that inflation is likely going to rise and policy uncertainty is going to rise as well. >> interesting, that same survey says the biggest worry is the ten year at four, not three. thank you, guys. good to see you both. when we come back, a new report says automation may be throwing a wrench into trump's
cnbc update. he considered lifts sanctions against russia if it is willing to make nuclear arms cuts. >> u.s. representative civil rights leader john lewis needs a history lesson and should be grateful for all that suspects have done for people. >> walmart says they plan on tadding 10,000 retail positions. the company says they're planning 6.8 billion in capital investments in the u.s. in the upcoming fiscal year. results in 24,000 construction jobs. according to market researcher, worldwide pc shipments have fallen for the fifth year in a low.
last year they were down be 6.2% to just over 269 million units. now back downtown to "squawk alley." >> donald trump taking credit this morning, saying with all of the jobs i'm bringing back to the u.s., and i believe the people are seeing big stuff, but could robot technology affect his plan to bring back jobs to the u.s. joining us this morning is mckenzie's global partner, michael. >> thank you for having us. >> just a cursory glance, it is jaw dropping half of all of the activities that people are paid to do, how is that even possible? >> we broke down all of the jobs in the work force.
and it is jobs we saw in court rate laps, when you look at that, theoretically after of the activity s could be automated. you can't buy the solutions you would need to automate the activities immediately. so we try to consider some of the factors that come between the possibility and the ability to automate. and they need to be te grated into individual solutions and they have to make business sense. we didn't talk about the costs, so we tried to analyze the cost of the automations, the additional benefit website and a national adoption curve overtime. >> some of the talk that we're
seeing already from cars to self check out, ordering from screens in restaurants, what do you expect to be the first dominoes to fall that people will notice and feel in the workplace? >> it is already starting to happen. we talked about it happening fast in mie close and slow in macro. one of them is predictable physical activities. those are what we see on assembly lines, for instance. also two other types of activities, one is collecting data, and one is analyzing data. affecting lower wage and lower skill workers. what we found is that it is something that not only front line workers do, but high paid and high killed workers have for
what they do. a third of the activities that we pay people to do include collecting and analyzing data. >> what is a typical job that would fall into that basket? >> health care can be a very critical sector. and physicians, we think what they can do is collect data and analyze what a disease might be. that is the thing that could be most automateble. other things are considered lower skill activities in the health care field. we're seeing more and more seems be able to provide advice to
doctors. >> nick, now in i'm a college student or the parent of a perspective college student, how do i dodge this bullet? >> well, it is a terrific question. certainly there will be a smaller number of very high paid and high skill jobs for creating thesetologies. certainly a set of activities there. i think everyone could benefit more from understands how to use the data. broadly speaking, i think as everyone's job will change, what we found is a significant percentage of everyone's job is automateble. that means there is a premium on being able to learn. so it will mean we're all changing our jobs going forward. if we're a researcher or a physician. >> all of the things you said are based on technologies
currently demonstrated, does it factor in things we don't even know about yet? >> in our research that we placed on the web, we tried to lay out scenarios for how things might evolve and decline. and what the potential results of that could be, taking all of those factors into account. it will happen foost a person whose job is affected. over time we have type to adapt while we adopt. >> potentially one of the chief dynamics of our time. we appreciate your time. >> thank you very much, appreciate it. >> and mark zuckerberg arriving in a dallas court earlier this
morning. they claim that oculus was based on stolen technology. >> we have been getting updates from inside the courtroom this morning, zuckerberg was first to call to testify, he was cross examined by the plaintiff's attorney if has been very interesting to hear what main debate is about here. and how the deal to buy oculus went down. the amount was not the $2 billion that was reported, and how quickly the deal happened and how little time there was for due diligence. >> what about the fine print that says if you develop technology while you're with a
company, it belongs to that company even if it was not assigned to you under that work. >> it comes down to where the technology was developed. a man previously worked for the company that is suing facebook and oculus. so the question is what technology may he have taken with him, zuckerberg was asked repeatedly if he knew that palmer lucky, one of the cofounders, signed an nda. that he worked with him before he came over, so there are all of these different characters, who knew what and when. was data wiped or erased from computers when he came over, and then there is always a question
of what did zuckerberg know when he was buying the company. there was a very interesting exchange a couple minutes ago when they reveal that while he was making the deal, he wanted to start on a friday and be complete by monday and it closed on tuesday. but there was an e-mail exchange that was revealed with his stop deal maker saying some things are being misrepresented by oculus. he said what was misrepresented is the deadlines by which they could complete certain products. the attorney is saying what kind of data was being taken from this company. they're in a break right now. we will continue to monitor it.
>> certainly zuckerberg made his way there and it puts into important the company. >> yes, zuckerberg says he is here because he thinks the claims are false, that it is important to him, and into why he cares so much about oculus. there was word that because facebook didn't have a phone platform, they wanted to own br, but they also said they want people to capture the world around them and share it in a way that you can only really do with vr. >> thank you, julia, look at shares of twitter today, it was downgraded from neutral do buy. >> watching all of the extra volatility in the marketplace,
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volatility has just surfaced. and an active day for analysts making big calls today, along with a rare downgrade for a darling of wall street. >> see you then, scott. let's get to the cme group, get the santelli exchange. >> good morning, carl. policy, policy becomes part of the fabric of culture and markets. no matter if it is good or bad policy. this morning steve leisman gave what i would determine a final interview of jack leiu. he said if you look at the history of the last 40 years, europe has been a source of stability in terms of their being peace in europe, most of europe, and in terms of economic
stilt. i get it. 70 years. cell phones? they were a dream in 1946. the way people watched tv, those that even heard of it in 1946. things sometimes change. what i found most interesting is how he put economically and geopolitically one word apart. the problem is that geopolitics captures much that is economics in it's path. let's take an example. let's look at the yur roan gone. let's look at brexit that is just a subset of that thinking. who has the right. who has the humility. what happens in the u.k. should be at the expense of brussels. is it uncomfortable for the world? yes, uncomfortable for markets,
absolutely. let's look at other issues. the strong dollar came up, and i think a strong dollar is a u.s. economy, in our national interest, we have done everything we can to promote a u.s. economy. janet yellen and congressmen, should we forget them? so i guess in the end, it really boils down to this. when you're on a course, take the obama care afford cable care act. the president is a cool guy, his numbers are still up. he said if you want your doctor, keep it, period, costs going down, period, those are not true, i'm not saying the new policies will be better, we'll have to wait and see and handicap it as we go.
just because he has a tough time with policy it is certainly not a reason to do it. everyone is about short-termism. if you're looking at the quotes of a stock, someone needs to look at the macro policy. markets and geo politics are a bad brew. >> thank you, rick santelli in chicago. when we dock back, back to the world economic forum and we'll check in with that gathering. see what we find having wrapped up that panel of leaders. we'll see what pfizer says the president-elect does not understand about pharma.
from mylan and comments from the president-elect on drug prices the health care industry facing an uphill battle when it comes to consumer trust. sara eisen is joining us now from davos. sara, what are they saying? >> good to see you. i just wrapped up a panel. cardinal health, boston group and philips. key players in the health care industry. the topic was trust in health care. timely with the recent issues you mentioned plus rising number of opioid deaths. that's why politicians have put pharma firmly in their crosshairs with president-elect donald trump saying just last
week pharma's getting away with murder and that the u.s. government is going to start bidding for drugs to lower prices. so we got a chance to talk to pfizer ceo, one of the biggest pharma companies out there about that, he says he just doesn't buy it. listen. >> it's a misperception, it's a very complicated industry. so i think once the president-elect gets briefed on this he will perceive there is a huge amount of bidding and extremely aggressive purchasing. >> read's point, the insurance companies are already doing the bidding. and that a few bad actors mostly in the generic drug business, are abusing the system. that broadly drug prices are not rising that much. and read's point is that once the president-elect finds out what's going on in that market he will rethink that policy potentially shaping it as -- >> continue to look at ways to provide the best capability for our country and do it most affordably and just an excellent conversation today.
a lot of progress. >> we talked about a couple of topics. discussed air force one, discussed fighter aircraft. we made some great progress on su simplifying the requirements of air force one, stream lipping the process, streamlining the certification. all of that is going to provide a better airplane at a lower cost. so i'm please with the progress there. and on fighters we were able to talk about options for the country and capabilities that, again, will provide the best capability for our war fighters most importantly. >> do you think mr. trump's actions on twitter are the right way to negotiate? >> i think mr. trump is doing a great job of engaging business. we're all on the same page here. our objective is to vid the best capability for our country most affordably. we want to generate jobs in the u.s. the u.s. aerospace sfri is the highest balance of trade
industrial in the country. we support about 1.5 million manufacturing jobs in the u.s. bowing is the biggest exporter in the u.s. we have about 13,000 mid and small-size companies in our supply chain in the u.s. you want manufacturing jobs, aerospace is the place to invest. we're proud to take on that mission. i think mr. trump's engagement with industry is going to help us grow manufacturing jobs in this country. >> how soon -- [ inaudible ] >> i think we're making great progre progress. so i'm very encouraged by today's progress. i think it will be in the very near term. and again, we're on the same page providing best capability for lowest cost. >> what do you think is a reasonable price -- [ inaudible ] >> together -- together we're working through simplifying the requirements and streamlining the process and applying commercial best practices. that's going to lead to
substantial cost reduction. so this is something that we're working together and i appreciate the team work approach on this. i think it's the right way to do business. >> dennis muilenburg, the ceo and chairman having met with president-elect at trump tower, meeting about the cost of air force one for starters. also some discussion according to wire services that trump was encouraging them to put some bids out on the f-18 super hornet to compete with the f-35 over at lockheed. something he's complained about in terms of cost. but you heard muilenburg saying this is the right way to do business as they make the trek. >> he also put a heavy emphasis on the trump administration, trump himself streamlining the requirements on air force one saying that that is going to allow them to deliver the plane at lower cost, deliver it more quickly. of course we don't expect to actually see that plane until after the president-elect leaves office. most likely. so how much does it actually
cost? we'll have to wait and see. >> a lot of symbolism in play here. interesting, sara that came just as you were giving your report in davos where ceos around world are reacting to the incoming president. >> and they're talking about this very issue. how they're going to deal with what they're getting. it's a curveball that is being thrown by the president-elect directly engaging with ceos and be businesses and directly engaging on the issue of cost. i was talking a this health care panel that i just did where ceos were talking about the fact that there is a reporting to them wide misperception about how much the u.s. government and u.s. consumers pay for, for instance, the cost of drug prices versus the rest of the world. they say it's actually not that big when it -- when you look at pharmaceuticals. so it's a about engaging this new president-elect and it's going to take a whole new communications playbook. no questionn't a it. i was playing a sound bite of you of ian read, the ceo of pfizer, saying once the president-elect finds out what's
actually happening in this business he's not going to be talking anymore about, for instance, medicare and medicaid bidding out for drug pricing. and that ultimately he thinks trump is going to be good for the industry because of his engagement and that is sort of the general theme here, guys. this guarded optimism where the global elite, ceos from around the world and economists, policymakers, are talking about this new framework. talking about what they're seeing rising stock market and better economic growth, trying to sort of square that with the fact that political risk is rising and that it's a more populism oriented kind of policy and narrative coming out of the new administration. >> it's all going to be different in the new building, carl. >> is that what it is? >> that's what we keep hearing. >> i've heard that before. >> when we shift tr campaign trump to president-elect trump the rhetoric will change. once he studies the issues, things will change. i don't think anybody knows what's going to happen but optimism reins. >> that's on obviously clear when we talk to ceos, sara, we
don't corps of engineersly know for sure. i wonder separate from the comments that business leaders are making what's been the reaction to may on brexit, trump on nato, trump on the eu, more geopolitical narratives? >> i would say biggest reaction is for the fact that president xi jinping is here at davos. first time we've ever seen a sitting chinese president come here. he addressed the world economic forum. it was a highlight this morning. he took the other side of the argument on trade, saying don't blame globalization. it's an easy scapegoat. everyone loses from a trade war. you've got that consensus thinking here and emp is trying to figure out how you make global trade more inclusive so you don't get populous pushback like brexit, like trump calling for border taxes and walls and tariffs and that sort of thing. >> wow. communist china taking the lead in advocating global trade. >> exactly. >> sara, we cannot wait --
>> when china itself, yeah. >> yeah. we can't wait for more from you in davos on a busy week. of course, earnings season, davos, the inauguration, we're going to have a lot to chew on on the last several days. let's get back to the headquarters. scott wapner and "the half." >> welcome to the "halftime report." i'm scott wapner. top trade this hour, trump rally and your money. with 72 hours to go until donald trump becomes the 45th president of the united states, what happens to the markets after the inauguration? can stocks keep climbing or is a correction in the cards? with us for the hour today, joe terranova, steve wise, jon nanlgian and here onset is aaron brown, he'd of mckro investments with ubs o'connor and tony dwyer, chief market strategist. doc, what's going to happen come the inauguration? this rally going to keep going or get stopped in its tracks?